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After the economy the biggest issue in Britain’s General Election is the NHS. This comes top, or near to the top, of most voters’ lists of concerns. Labour want to make the most of these worries, while the Conservatives want to muddy the waters.

Two things seem to worry voters in particular. The first is pressure on Accident & Emergency services, which is knocking on to other parts of the system. This gives a general sense of the system failing. The second is the effect of NHS reorganisations of local services. This is often associated with outsourcing. Whether the public is as incensed about this “privatisation” as people on the left think is an interesting question – but they are suspicious of any threat to familiar local services.

That the NHS is under stress should be no surprise. As the proportion of older people in the population rises, so does the workload – but not the tax base from which it is funded. Furthermore many new treatments tend to be expensive; technological change does not improve productivity – but simply increases demand as new treatments are found.

There is political consensus around the free-at-the-point of use principle of the NHS. This has both flaws and strengths, but the NHS does quite well in international comparisons, though more for value for money than keeping people alive. Given this there are two important issues for the politicians to tackle. The first is organisational architecture, and the second is funding. They are related, of course, since the efficiency with which the service uses its funding depends on the architecture of the service. But it helps to keep the two separate for now.

First let’s consider this organisational architecture. The NHS has evolved since a chaotic mix of institutions was nationalised in the 1940s. Two ideas have always competed: a Soviet-style command and control model, with clear accountability to the politician at the top of the system; or a demand led organisation where users create demand and the service is forced to follow it. The Left tends to focus on the first, which is slow to react to change, and beset by tribal organisational silos. The Right prefers the latter, which suffers from a lack of reliable information about the true level of demand, and creates organisational instability.

What we have is a compromise between the two approaches. The service is divided between commissioners, who identify what services are needed and make choices as what to prioritise with the available money. And providers, such as hospitals, who actually deliver services based on the identified demand, a small proprtion of which is outsourced to the private sector. In addition there are other organisations charged with making it all work, including regulators of various sorts. This includes NICE, which rules on what treatments provide acceptable value for money. This basic architecture was established by the last Labour government, and remains largely unchallenged by the parties – though it is disliked by many health professionals.

But the details of Labour’s system were flawed. It was designed by management consultants in less stringent times. At its heart was an over-engineered monster called World Class Commissioning, with commissioning being spread out amongst a large number of Primary Care Trusts – which were bureaucratic, with little clinical input and token local accountability. The Coalition rightly attacked this structure, and set about redesigning it – with commissioning now being given to a combination of national specialist bodies and local commissioning groups, run by general practitioners. This succeeded both in bringing in more clinical input and improved local accountability. But it was a massive and distracting exercise (in spite of a Tory promise of “no top-down reorganisations”, enshrined in the coalition agreement). This was a serious mistake which has left much muddle in its wake. It was perfectly possible to achieve much the same ends on an evolutionary basis – piloting different approaches in different regions. The reorganisation has created a huge amount of bad blood, and not a little paranoia amongst health professionals. It has been accompanied by a steady process of outsourcing elements of the service, though no private or third sector organisation will take on the major hospitals that are at the system’s heart.

Alongside this reorganisation has been steadily increasing demand, which has run ahead of funding. The combination has resulted in huge organisational stress. The way in which the service started to cope with the extra demand, and the need for greater efficiency, was classic top-down and Labour-inspired. It was called the “Nicholson challenge” after the then Chief Executive of England’s NHS. Funds were ratcheted down gradually each year on all parts of the system, with a bullying “just-do-it” approach. This did not unlock enough of the creative thinking and deeper re-engineering that the service required. Much of the result was mindless cutting and hoping for the best. Under a new Chief Executive (with reduced job scope), Simon Stevens, a more intelligent approach is being adopted – but the wreckage remains.

Given this history, surely the best idea is to work on the current structure on an evolutionary basis. This is what the coalition parties propose to do. The main work-in-progress is something called “integration”. This means getting social care, run by local authorities, to run jointly with the NHS. Awkwardly, this cuts across many of the bureaucratic structures currently in place, especially when it comes to parcelling up the money. It is far from straightforward, and it makes sense to proceed by means of locally run pilot schemes. It runs alongside greater devolution of responsibilities, as exemplified by the recent deal regarding Greater Manchester. The wider the scope of a service, the more localised the organisation has to be in order to prevent unmanageable complexity and stasis.

The main challenge for Conservatives is their approach to outsourcing. There is nothing wrong with outsourcing elements of the NHS. It can bring in fresh ideas and fresh management. It can be used to bring in new ownership structures, like cooperatives and social enterprises, to replace the hierarchical empires that the current NHS fosters. But the way it has worked out is dysfunctional. The tendering process can be so complicated that only behemoth suppliers need apply. These behemoths can afford slick tenders put together by professional marketers and priced at whatever level it takes to win. Once they win they are free to break their promises and a general period of mindless hollowing out follows. Sometimes this is what is needed; usually not. Many Conservatives just don’t get this.

The challenge to Labour is a bigger one. They want to respond to the anger over the last reorganisation and reverse parts of it. Does this imply another chaotic reorganisation? Will it kill the good elements of reforms along with the bad? Do they think integration should be enforced top-down from the centre? Or will they follow the path of devolving political responsibilities? Does their idea of in-house NHS services being given preference mean less value for money and slower innovation? Will their idea of capping the profits of the outsources prove to be yet more bureaucracy that favours the heartless behemoths rather than the innovative social enterprises? Will Labour revert to the top-down, bullying style of management of old? And will they need SNP votes to get their reforms to the English system through? More uncertainty and chaos beckons.

The Lib Dems have a rather interesting take on NHS policy. They want to prioritise mental health services. As I have written elsewhere, I think this approach is inspired, and one of the better reasons for voting for the party. They stand for intelligent continuity.

And so we come to funding. Britons do not spend a particularly high level of money on health services (much less proportionately than the Americans), and there is no economic reason why the country shouldn’t spend a lot more than it does. There is no evidence that the overall level of demand is excessive because the service is free; people really want the services, and would pay a lot for it them if they had to. The problem is the opposite: funding is constrained by the need to pay for the service through taxes, where it competes with a whole lot of other things, like schools and policemen. And the government isn’t raising anything like enough tax to pay for it all.

Last year Mr Stevens produced a plan which showed that the service will need an extra £8bn per annum in five years’ time, even after a lot of efficiency savings. Will the political parties follow his plan? The problem is that its affordability depends on how well the economy and the tax base does – which is unknowable. The gaps between the parties come down to the different ways in which they are handling these forecasting uncertainties. The Conservatives are the most optimistic, Labour the least, and the Lib Dems somewhere in between. None of them are committing to sufficient tax rises if a growing economy does not deliver the extra tax revenue. Both Labour and the Lib Dems are offering some tax gimmicks to help close the gap, but none are offering the increases to Income Tax, VAT or National Insurance that will be required if the economists get their growth projections wrong (yet again). Labours plans are obscured by their issues of NHS organisation; they will not sign up to Mr Stevens’s plan for that reason.

If the NHS is starved of funds more people will go private, social solidarity will fade and a death spiral will be put in motion. Something very like this has happened to NHS dentistry. If we want to keep the NHS in its current format, with few charges, then this means extra tax, and not just the somebody-else-is-paying sort. It really is quite simple. It is very disappointing that our politicians (and Ukip, the Greens and the SNP are as bad as the others, or worse) will not face up to this. I find it impossible to choose between the parties based on their funding proposals.

Which leaves organisation as being the decisive issue. The coalition managed one step forward and one back. Labour’s attitude to organisation threatens another step or two backwards. The Conservatives are suspect on outsourcing and the most suspect on funding. The Lib Dems offer intelligent continuity, but, sadly, even in coalition they are unlikely to be given enough scope to put their way forward into practice.

Labour’s plan for winning the General Election in May has a special place for the NHS. They are seeking to “weaponise” it, and promote themselves as the only party that can be trusted to run this great British institution. And yet their NHS policy has deep flaws. Now the Conservative/Liberal Democrat coalition government has come up with a plan to integrate health and social care budgets in Greater Manchester. To maintain the warlike metaphor, this looks like surgical strike on Labour. In fact the story arose from a leak in the negotiation process, and seems to be the brainchild of Simon Stevens, the politically neutral head of NHS England. But the policy poses serious questions for Labour.

The details of yesterday’s news are a little vague. The Coalition had already announced plans to devolve more powers to Greater Manchester, working through the local councils (mainly Labour, but with Conservative and Lib Dem ones too) and an elected Mayor. And integration is everybody’s favourite reform idea for the NHS. It refers to merging the health budget with that of social care (currently controlled by local authorities), so that the policies for the two can be coordinated properly. This is important because one of the main problems at NHS hospitals is that they cannot release patients to social care beds. Integration of this sort is already being piloted in such places as Torbay. This looks like a pilot on a grander scale.

As a reform idea, the Manchester proposal looks entirely sensible. Sarah Wollaston, a Conservative MP who is a doctor, and no government stooge, offered a knowledgeable and effective advocacy on Radio 4 yesterday lunchtime. Integration has been one of Labour’s big ideas. But Labour can’t bear to give the government any credit for policy on the NHS – as this undermines their weaponisation plan. So their spokesman, Andy Burham, rubbished the idea. He attacked it as undermining the “National” in the NHS, because it was a localised solution rather than being dropped from a great height from Westminster. He also suggested it would be another “top-down reform”, which the government had promised not to do.

And yet both these lines of attack expose weaknesses in Labour’s own NHS policy. In the first place, if they are serious about promoting NHS integration, how on earth are they planning to do it? The quid-pro-quo of an integration plan is surely more local devolution – otherwise you simply create a monstrous bureaucracy, and a feeding frenzy of large consultancy firms proposing over-engineered implementation plans (er, like the last Labour government’s reform of NHS commissioning). And secondly, are Labour or are they not planning a top-down reform all of their own? Their proposal to scrap the government’s Health and Social Care Act suggests just that. And if they intend to implement integration across the whole country at once… well, that just proves it, doesn’t it?

Which highlights the real problem for Labour. Their plan is to ride the tide of anger amongst NHS insiders over the government’s record on the NHS. They headline attempts to outsource some services as an NHS “sell-off” or privatisation. This is vastly exaggerated – no major hospitals are being outsourced (private businesses would be mad to take them on) and GP surgeries, er, have always been private businesses (a fact that confused the hell out of a save-the NHS campaigner that called on me a couple of months ago). But any plan to reform the NHS in any serious way involves taking on these insiders. The idea of integration to insiders is popular probably because it is seen as a way of hitting the ball into the long grass: the setting up of some toothless committees of professionals who purr about “collaboration not competition” and achieve very little except requests for yet more money. The more serious and specific Labour gets about reforms that promote efficiency, the more dissent they will get from their core supporters, and especially the trade unions. The hard fact is that Labourare proposing to dismantle the Coalition’s health reforms at the moment they are starting to show some promising results, like this devolution initiative.

Now the public probably don’t think much of the Coalition’s record on the NHS, but they surely accept that reforms will be needed to make the organisation more efficient. And if Labour appear not to be serious about that, then their line on the NHS is undermined, and their line on tax-and-spend, already weak, gets shot through. With enough pressure this weakness will become more and more apparent – and there will be a greater and greater risk of dissent in Labour ranks. They are offering just bluster. Far from trying to avoid the NHS as a campaigning issue, the coalition parties have the opportunity of a devastating counterattack, especially if Labour persists in opposing the Greater Manchester plan.

All of which shows how fatally bad is Ed Miliband’s leadership. He has valued party unity over making serious political choices. He has chosen sound and fury over policy substance. He hoped to craft clever policy positions that cover the cracks in his own party while providing credible ideas for saving the country. Alas serious policies mean taking on vested interests in your own ranks, not just the usual villains. The unity of silence in Labour ranks is not a token of assent – it is a token of denial. Labour’s most vocal supporters, and the providers of the bulk of their funding, do not think that Labour is serious about public sector reform and austerity. As Labour is pressured by the coalition parties the greater it is in danger of falling apart just when unity is most important. It is a political strategy put together by policy wonks and campaign tacticians – and not those with serious nous about taking on political responsibility.

The Coalition parties have their own weaknesses of course. These may yet save Labour. But a meltdown for Labour cannot be ruled out on this form.

Many Britons complain that political correctness stops important issues being talked about. By that they usually mean immigration and cultural integration. Now we talk about these things all the time, and we are coming to understand why that culture of political correctness was a good idea. Pointless, nasty behaviour to immigrants and people from ethnic minorities is on the rise, while yet more rubble is strewn in the path of necessary economic development. But there are issues that are important but where there is a conspiracy of silence. Foremost amongst these is Britain’s National Health Service (NHS). This is not a good idea.

Well it isn’t that politicians don’t talk about the NHS. It has become a central theme of Labour’s election campaign, and the Green party, in their bid to harvest left-leaning voters, have jumped in too. But these campaigns challenge the very idea that the NHS should be reformed. Any suggestion that elements of the NHS should be run by private businesses, or that a local facility should be closed, is attacked virulently. The idea behind these campaigns is that the NHS is under attack, is being “sold off”, and needs to saved by a government that will let our heroic doctors, nurses and ambulancemen get on with their jobs unmolested by rapacious hedge fund managers and bankers. The government’s response to these challenges is distinctly muted – they try to deny that much is changing at all, and point out that they are recruiting more these wonderful doctors and nurses and keeping the money flowing.

But senior NHS professionals are worried. Today it is the turn of Professor Sir Bruce Keogh, NHS England’s medical director, to speak out. He warns that without major changes to the way care is carried out the service will collapse. That means that many existing facilities will have to be cut in order to make room for more cost-effective ways of treating illness which do not involve big hospitals. You don’t have accept Sir Bruce’s prescription to understand the nature of the threat.

The first problem is demographics. The proportion of elderly people in Britain is on the rise. This is increasing the number of patients, and presenting the service with more complex cases that it is difficult to deal with adequately. It is also undermining the tax base from which the NHS is funded and the pool of workers that the NHS needs to recruit. The next problem is a change to the economics. More advanced and effective treatments cost more money. Rates of pay, especially for skilled staff, are getting higher.

These problems are well understood, even if politicians and public alike would rather talk about their implications another day. There is a third problem too. And that is management. Dealing with health issues is a very complex matter, and it is becoming clearer that the way we try to go about it isn’t really helping. Our default method is to break the task down into a series of specialisms and give each a separate autonomous organisation. Primary care is split from acute hospitals which are separate from social care, with mental health handled by yet another set of organisations. But all these things interrelate, and good patient care depends on getting the coordination right. For example the current NHS crisis in hospitals is presented as overflow in Accident & Emergency, but it has its roots in the inability to move older patients into more appropriate social care settings when the acute phase of their illness is over.

I am very familiar with this type of management problem, albeit in much simpler contexts. It was the focus in the 1990s of a management revolution that went under the name of Business Process Reengineering. The key insight here is that one of the main obstacles is the shape of the organisation itself. Pouring more resources into it won’t help, or not help by much. If you fix a problem in one area, it simply pops up in another. That means that the shape and structure of health care has to change in order to cope with the extra pressures being thrown at it. That in turn means politically sensitive closures and, almost certainly moves that can be described as sell-offs. It is worth pointing out, though, that simply outsourcing an element of the service without restructuring the way care is delivered is just as fallacious as pouring extra funds into existing structures. This is a point that some on the right, and in government, have not grasped.

I think this is reasonably clear; there may even be consensus about it amongst those that try to look beyond the short-term politics. But the fog then starts to descend. The problem is highly complicated, and the costs to failure very high. The way forward is not obvious. Both this government and the preceding Labour one grappled with it. Both got some things right; both have made mistakes. But it is a debate amongst a small elite of policy wonks and senior professionals, when broader engagement, to prepare the political ground, is what is required.

Is the basic model of the NHS under threat? This is an open-ended commitment by the taxpayer to fund health care for all citizens. This has some obvious problems – there is no clear way to limit demand. Health care, it turns out, is not like the drains, where once you have fixed the basics, people forget they are there. That was what some people thought when the NHS was set up. People don’t like getting ill, so, said the optimists, that would limit demand. Alas longer life and reduced pain are consumer propositions to die for; potential demand seems endless.

This is the key to a further insight which few seem to have grasped. People often talk of high levels of health care spending being unaffordable. This is untrue. People prize healthcare above many other things, and are happy to give up these other things for less pain and a longer life. You only have to look at the enormous sums spent in the USA on health care to understand that. The problem is how, exactly, do you get the money from people’s pockets and into that of health service providers. The critical question for the future of the NHS is how much more can be raised through taxation.

Which is another area that we should all be thinking about. Could we raise a lot more through taxes if the process was more transparent and people had more confidence in it? Or should the NHS start charging for more things? Should we develop a model of “basic cover” vs “luxury cover”, and bill for the latter? And what could the latter include (anti-cancer drugs that might prolong life but aren’t deemed cost effective?). And that leads to another series of questions we would rather not ask, about the meaning of life and death.

And there’s a further problem. How much do we focus resources on where the demand is currently, or and how much to where we think the areas of greatest need are. The last government talked often of rectifying “health inequalities”, and started a process of shifting resources to poorer areas with worse health outcomes. That put facilities in areas with high current demand, but less actual poverty, under pressure. Most of the NHS’s big disasters, like the failure of Mid-Staffordshire Trust, occurred in areas that had high demand, especially from elderly residents, but which were not classed as being in poverty.

If we don’t fix the NHS, a parallel private health system will build up beside it and undermine it. Something like this has already happened with dentistry. We have little chance of a serious, mature political discussion this side of a General Election. But the sooner that the public demands their politicians address such issues the better. Rejecting the facile slogans of Labour and the Greens would be a good start.

Today the Liberal Democrats announced and eye catching policy toimprove NHS funding by £8bn a year by 2020 (in England). This matches the figure asked for by NHS England chief Simon Stevens – so it isn’t plucked from thin air.

How is this to be paid for? First £2bn extra is already planned and accepted by the other parties (Labour want to add another £0.5bn). A further £1bn comes from more taxes on the wealthy. The rest will be gradually added as the economy grows. The Lib Dems say that public expenditure should keep pace with national income.

There are good and bad things about this new policy. First the good thing. The £8bn funding figure is entirely credible, given the direction of demographics. Mr Stevens is no lefty. He knows that the NHS can be more efficient and has plans to make it so. But that only gets you so far. Any party that promises to keep the NHS within its current scope and free has to address this gap. This moves, or should move, the debate on the NHS out of the area of gimmicks and into serious choices.

Except that it doesn’t. They’ve made the whole thing look to easy. Tax some other people a bit more and the rest comes from growth. If it’s that easy the other parties can do it too. This is not different in substance to what Labour are offering. It is more of a challenge to the Tories who want to use the proceeds of growth to fund tax cuts.

And growth cannot be guaranteed. There are severe economic headwinds, from demographics, from changes to technology, from changes to world trade – to name but three. To say nothing of the legacy of piles of household and state debt.

To be distinctive, the Lib Dems needed to make it look harder. Which in practice means raising taxes – income tax, national insurance or VAT. Remember Paddy Ashdown’s promise of 1p income tax for education? This would have made the promise more credible, and got a real debate going. It would then be Labour who would be forced to mutter promises about future growth, which the public are likely to discount.

Instead this looks like another politician’s promise that is less than it seems. What a pity.

Last weekend there was outrage from The Daily Mail that Prince Charles had being lobbying government ministers to give more space for complementary medicine on the NHS. This provoked a piece on the BBC Today programme (at 0833) on Saturday morning. In this UCL’s Professor David Colquhoun made short work of Tory MP David Tredinnick, who was attempting to defend homeopathy, the target of choice of those wanting to drive complementary medicine to the lunatic fringe. Indeed, very few advocates of complementary techniques do a decent job of defending them in public forums, quickly resorting to dodgy mumbo-jumbo and dubious scientific studies. And yet there is a case to be made.

I find it a bit awkward to make this case myself. I have not used such therapies, and nor am I likely to. I am simply in too deep with conventional scientific scepticism to give any credence to their supporting patter – “energy fields”, “life forces”, or homeopathy’s “like cures like”. And without that, I suspect the techniques lose a lot of their impact. However, people I like and respect do use selected complementary techniques, and they have value.

The best way to start a defence of complementary medicine is attack. Conventional, evidence-based medicine has its own weaknesses. The technique depends on breaking health issues down into bite-sized problems, and then testing therapies to treat them using statistical tests against a placebo. Once a therapy passes this test, it then gets rolled out to anybody suffering from the condition concerned. This approach benefits from scientific rigour, and has steadily improved the effectiveness of conventional medicine over the generations. More recently the focus of the technique has been more on finding what works than necessarily why. This makes it less vulnerable to dismissing therapies that do not work in theory (as happened in some spectacular early medical failures in the 19th century over the importance of hygiene and clean water). But it has certain blind spots designed into it.

The first problem concerns placebos. The reason why this is the null hypothesis against which therapies are tested is that placebos have a measurable beneficial effect in many cases. The main scientific sceptical explanation for any benefits of complementary therapies is that it is a placebo effect. A supporter might go further: complementary therapists understand how placebos work better than conventional therapists: it isn’t just a placebo, it’s a top class placebo. But you can’t test a placebo against a placebo. Back in the 1980s a practicing GP told me how one of his favoured techniques was to prescribe harmless sugar pills to his patients, and he claimed great benefits from doing so. Surely if that sort of thing is allowed on the NHS, why can’t other placebo therapies? And the answer isn’t to ban all placebos – though doubtless that is the approach taken by conventional medicine advocates; something tells me that my GP wouldn’t be allowed to prescribe his sugar pills nowadays.

The second problem is the fragmentary approach of conventional medicine. Fragmentation has been elevated to a positive religion in the NHS. You can’t experience the service without being handed to several different professionals of different shapes and sizes, each with their carefully rationalised boundaries. Each handoff creates risks, and stories of catastrophic breakdowns in hospital treatments abound – patients left for hours on trolleys, starving to death, or forced to drink water from plant pots – and even more cases where post hospital after care breaks down. One of the few common themes across complementary disciplines is that they are holistic. Indeed the very idea of holistic treatments (now very much part of modern management jargon) was originally derived from complementary medicine, or that is where I heard it first, anyway. You see a single therapist, who gathers as much information about you and your condition as she can, integrates it, and then moves on to treatment. The diagnosis is likely to be a large part of the cure in its own right. And yet scientific testing of complementary therapies is liable to start only after the diagnosis has ended. All this proves is that if you go out to a shop and buy homeopathic remedy, you are on to a hiding to nothing. That does not prove that the complete homeopathic therapeutic process is useless.

There is a third problem. Evidence has to be gathered by using large numbers of people. In this process there is very limited opportunity to distinguish between the different needs of individuals. As a result the evidence tends to show not that the therapy works for everybody, or even most people, but that on average it is better than the placebo. The result is that lots of people are prescribed treatments that are, for them as individuals, useless. How many people do you know who complain of medication that gives unpleasant side-effects but does not seem to be doing them any good? The scientific evidence says they could be right, but is rather helpless after that. Complementary therapies are much less likely to have side effects, though they don’t have the proven benefits either. I do wonder whether for some conditions the overall cost-benefit balance of complementary therapies against conventional ones is constructed fairly.

And finally we need to address the question that few advocates of scientific method will admit to. That scientific rigour has its costs. There are areas of potential knowledge into which it is incapable of reaching. The higher your standard of rigour, the less that is capable of being revealed. The method is too blunt an instrument to deal with many types of issue. It can’t handle too many variables at a time, especially if they are interdependent; and any ideas that mess with constancy of the laws of nature are ruled out a priori. It struggles to find ways of testing mind over matter propositions, which often play a part in complementary medicine’s thinking. How many people do you know who feel unwell, go to doctor, who commissions tests that just don’t find anything? You don’t have to take on mystical ideas to see that the bluntness of conventional diagnosis leaves huge areas of illness as a mystery. And when this happens conventional medicine is worse than useless. It creates stress and frustration, and doctors start to disbelieve the patient, making the problem worse, not better. Complementary techniques are much better at handling patients suffering from these sorts of problems.

So what are my conclusions? A little more humility on the part of the advocates of conventional medicine is warranted. They don’t know everything; they are not very good of handling conditions that are difficult to diagnose; they are too sanguine about the collateral damage arising from evidence based treatments on those they do not help; and they fail to see how the fragmentary way they handle problems is bad for patient health. With this humility they might understand that once they have eliminated the nice, well-defined illnesses in their comfort zone – cancer, heart disease, strokes, bacterial infections et al – being open to patients who want complementary treatments is often the best way forward. And I haven’t even mentioned the corrupting influence of big pharma.

The NHS is deep in a long term crisis. Last Thursday NHS England published a “call to action” outlining the emerging crisis. This attracted a day or so of news coverage, focusing mainly on a £30 billion funding gap. But there was no political debate, and the story quickly died. It was replaced yesterday by a story on the NHS’s abuse of the “Liverpool Care Pathway” for end of life care, and today by an investigation on struggling hospitals. Both stories are backwash form the continuing struggle of NHS management and staff with financial pressures. But where are the politicians? Labour are waiting to pounce on stories of struggling accident & emergency services to promote a general air of government incompetence on the NHS; the government try to play things down, blaming any problems on long standing issues not tackled by the previous government. A debate about the long-term options for the service it is not. So what should they be talking about?

The dimensions of the crisis are quite clear. Britain’s NHS is almost entirely funded from tax. But after the economic crisis of 2007-09 the tax base has shrunk. Furthermore a number of trends, not least the increasing proportion of older people, point to a slowing down of the overall rate of growth in the economy and hence taxes. And yet some of those same trends will create growing demand on the NHS. The government has promised to protect the NHS budget in real terms, much to the chagrin of right wing critics, but this will not solve the problem of rising demand. The NHS England report settled on a headline gap figure of £30 billion by 2021 – after toying with £60 billion by 2025, the number used by Health Service Journal (HSJ) in its preview.

The strategy is to buy time through efficiency savings. As a large, monolithic organisation, with weak accountability, inefficiency is rife. NHS top management has been ratcheting up pressure on the component services by progressively squeezing the available funding, , in a process known as “the Nicholson challenge” after NHS England’s chief executive, Sir David Nicholson. The NHS England report claims that this is on track to deliver its target of £20 billion efficiency savings by 2015, but there is plenty of reason to doubt its efficacy, as the number of crises with a financial root seems to grow.

But the strategic point is that efficiency is not a long term answer to the pressures. The NHS paper calls for fresh thinking, but seems to rule out most radical ideas, like charging for, or heavily restricting services, although in doing so it is only holding to the current political near-consensus (the far right does not go along with this, but everybody else does). Let’s take a step back and look at this.

The first point to make is that increased demand for health services in the economy will be met by increased supply. Occasionally you hear people suggesting that the economy can’t bear an increase. But there is no fundamental economic reason why the proportion of the economy taken up by health care cannot increase substantially. It does not depend overly on imports, and there are plenty of things the public can give up to make way (own fewer or cheaper cars or clothes, go out less, and so on and on). Healthcare offers the prospect of a longer life and less pain; it is a consumer proposition, as I have pointed out in an earlier blog, to die for. If there is demand, there will be supply. The only question is how that supply will be met.

There are broadly four ways the NHS will meet this crisis:

Taxes will be progressively increased so that taxpayer funded services maintain their current profile overall. This is clearly what is favoured by most NHS insiders, and left wing policy types who like the paternalist structure of the current NHS.

It will stratify into a class-based service, where only poorer people will use it, while richer people go private. This will happen because the NHS service will be considered dangerous, shoddy, and accessible only after an intolerable wait. This is largely what has happened to NHS dentistry, and it is what will happen if the NHS is allowed to muddle on with its current level of funding (or if funding is cut).

The NHS will concentrate on excellence in a smaller core of services, while letting people go private for others. However healthcare has few neat boundaries, and it is difficult to see how this would work in practice.

The NHS will start charging for more services, and accepting co-payments for cosmetic and other add-ons. This may be done with increased collaboration with the private sector, rather like NHS optometric services. This is the direction of travel favoured by the right, apart from those who secretly favour option 2.

These solutions are not mutually exclusive, and indeed option 3 is probably only viable in conjunction with 4.

The first strategic question is how far new taxpayer funding will be forthcoming. Many seem to assume that it will be. John Appleby, economist at the health think tank the King’s Fund, assumes this will be so: the economy will be growing again by 2025, and public demand for increases to real spending will return. I’m not so sure: the headwinds on the economy are severe, and I don’t see any return to the growth rates we have previously seen for more than a two or three years in a row. Meanwhile demand from other areas of public expenditure has been suppressed and could bounce back. And I think public attitudes to higher taxes have changed, after the general squeeze that has been put on living standards. Some left-wingers assume there is large pot of money available from taxing rich individuals and businesses. This is open to doubt, however, and it has proved a volatile source of tax revenue both Britain in the past, and to other economies, like California’s, whose public funding depends heavily on taxes on the rich.

Besides, I do not think that taxpayer funding is particularly efficient. It means that resources tend to be allocated top down according to political objectives, and not where it is really needed. And difficult problems tend to be left unsolved rather than confronted. My guess is that we will end up with option 4, after having given options 2 and 3 a try. It will continue to be a very bruising time for the NHS.

For those that want to avoid this, I think the most promising way forward is to bring health services into a complete rethink of public services to make them more integrated with each other, and centred on people rather than symptoms. And in case you think that sounds like motherhood and apple pie, its practical consequence means dismantling current power structures, and pushing towards democratically accountable local control. That will not be popular amongst NHS professionals, and we know how much noise they can make. Some on the left are starting to think this way, and while I don’t trust the left, with their penchant for paternalism, this may be the basis for a useful political coalition. One interesting aspect of this is that the other services (personal care, housing) with which the NHS would be integrated are not “free at the point of use”, considered so sacred in the NHS, which may allow the whole question of charging and co-payments to be fudged in a constructive way. Here’s hoping that something can be achieved along these lines.

The NHS is quite high up the news agenda these days. From the media there seem to be two big issues: culture and privatisation. The mainly right-wing press say that much of the NHS lacks a caring culture and this often leads to a breakdown of service. Left-wingers, and NHS insiders, worry about the new commissioning rules, and whether unscrupulous private companies will bid their way into contracts that destroy what is good about the service. These are both valid concerns, but a third issue should be causing more controversy than it does: funding. Not so much the NHS’s overall budget, though that too is worthy of debate, but how it allocates what it has. Recently the Health Service Journal has highlighted no less than three quite distinct issues on the topic. Politicians should be paying attention.

The first was an opinion article on 14th February by Robert Royce, a visiting fellow at the King’s Fund, the health think tank. His subject was the Mid Staffordshire Foundation Trust: but not the Francis report, but the preceding report by Monitor, its regulator. This report questioned the trust’s financial viability, suggesting that the hospital lacked scale. Hospitals like Mid Staffs are funded mainly through something referred to as “the tariff”, and which used to be called by Orwellian name “Payment by Results”, which was put in place by the New Labour government. This puts a price on every service episode the hospital performs: payment by activity, rather than by results. This system is often portrayed as being a commercial, market type discipline, but the tariff looks like no market tariff that I have ever seen. It is massively complicated, requiring big information systems resources to work.

What the tariff does remind me of is a transfer pricing system to allocate costs internally between two fractious units of the same organisation, who hope that by referring the problem to management accountants they can find an objective resolution. As the accountants grapple with the complexity of the problem they add layer upon layer of detail, in a hopeless quest to replicate the infinite complexities of real life, resulting in something which is nearly useless for management purposes. The system is designed for a political rather than a commercial environment, with the aim of pretending that strategic value judgements are mere technical problems. In the NHS almost all commentators go along with this pretence.

Mr Royce points to one pernicious value judgement in the tariff. It is that emergency services are bad, and elective services are good. Mid Staffs is perfectly viable financially on its elective services, but is being dragged down by losses on its emergency services. What if the tariff were raised for emergency services and lowered for elective, to genuinely reflect the underlying costs? The the hospital’s viability might look altogether different.

The second article was in the magazine’s “Resource Centre” section on 14th March, and is entitled The real reason for “failing” hospitals. It is by Sheena Asthana and Alex Gibson from Plymouth University. This is dressed up a piece of academic data analysis, but it is politically pointed. The authors look at the funding formula for Primary Care Trusts (PCTs: the bodies that fund the hospitals, at least until 31 March), and tries to correlate troubled hospitals and underlying population characteristics. They find that there is a strong correlation between hospital stress and a high proportion of older people in their catchment area. Their claim is that the funding formula is diverting financial resources away from these areas of greater need towards areas that are less wealthy – and this is the fundamental reason why so many hospitals are failing.

The last government was obsessed with addressing “health inequalities”, an expression that I hate because it implies that the solution is making things worse for the better off, rather then improving the lot of the worse off. And if Ms Asthana’s and Mr Gibson’s study is to be taken at face value, that is exactly what is happening. The present government show no sign that they want to address this awkward issue, and, according to the authors, much the same allocation is being ported into the new system.

The third article was another opinion article, this time by accountant (sorry, independent consultant and former NHS finance director) Noel Plumridge on 21st March. This looks at something that has been bothering me. If the NHS budget is protected, and increasing at a rate faster than most people’s pay is rising (2.6% as against 1%), how come so many NHS organisations are under such financial pressure? He finds the figures for next year’s budget less than transparent but concludes that there are no plans to spend a large chunk of the money at all: they are destined for unspent surpluses or contingency funds to “mitigate risk”. These surpluses are a point of difficulty: the individual trusts that make a surplus are supposedly allowed to reinvest them in future years. But under Treasury rules the NHS as a whole must hand the funds back to the Treasury for good. Is this just a backhand way of breaching the promise to ringfence NHS funding?

I only subscribe to the HSJ because I forgot to cancel it after my attempt to find a job in the NHS ended in failure – now I find interesting articles nearly every week. What these three articles show is that there aren’t enough accountants in politics. NHS leaders are being allowed to get away with some highly contentious political policies by dressing them up in complicated accountancy.

Last Monday, three days ago now, I lay, conscious, on an operating table at St George’s hospital, Tooting. A tube had been inserted into my artery in the right arm at the wrist, through which dyes and then wires were inserted. On my left wrist a drip had been inserted into vein so that drugs could be injected rapidly. Two surgeons were doing their stuff around the area of my legs, looking up at two monitor screens. A large cylindrical device was being pointed at my chest at various angles. I lay as still as possible, as the surgeons exchanged comments and gave occasional orders to technicians outside the room, who would respond over the intercom. Some music was playing quietly in the background.

The surgeons were doing an angiogram. They were pumping dye into my bloodstream to make the blood flows visible through an X-ray camera and spot any problems with the blood flow to my heart. And they did find a problem. “One of your arteries is completely blocked. This almost certainly caused your heart attack,” one of the surgeons said to me, “We want to insert a piece of wire to clear it.” I consented. The surgeons then completed a procedure known as an angioplasty. This involved using a piece of wire pushed through my arteries to insert an stent, a small length of tube, into the blocked bit to open it up, after first inflating a small balloon to create the space.

It was really only then that I fully realised what had happened – that I had indeed suffered a heart attack, and that as a result my life was in the hands of these two surgeons and their team. Until then I had thought the problems might be some sort of viral attack (as my elder brother had suffered a few years before) with few longer-term implications. The previous evening, my family visitors remarked on how well I was looking – though the medically literate among them could spot the abnormal trace on the heart monitor that I was wired into. This is a shock. I had no indication until then that I was at risk. I take regular exercise; I’m not overweight; I have never smoked; I eat my five a day; I even make sure I have a couple or more portions of oily fish a week; my blood pressure has always been normal; no tests that had been run on me had shown me with anything other than a very healthy heart. It really can happen to anybody.

The problem seems to have started over two weeks beforehand, while we were on an organised tour of Sicily. One night, after dinner, and a day when I had felt slight constrictions to the chest area, I started to suffer acute chest pains. I couldn’t sleep. Eventually, at about 3 or 4 a.m I took some aspirin, and the pain subsided and I got some sleep. I was puzzled at what had caused this episode. The chest pains pointed to a heart attack, but none of the other symptoms did. I wasn’t breathless, I could carry out normal physical activity. As the pain subsided, the idea that it was severe indigestion took hold. Gavascon seemed to help with the contuining mild episodes of pain. The local diet can be pretty acid. The day after the attack I had no trouble in climbing to the top of a stone tower to get a wonderful view of the western Sicilian coast. The next day, though, I felt lethargic and a bit feverish, collapsing into my hotel bed for an afternoon; but a couple of days after that things seemed to return to normal. We continued with the tour, returning home at the end of the week.

The episode has was scary enough for me to go to my GP in the week after we returned. I probably wouldn’t have done this had my wife not insisted on it, though I had noted that my fitness at the cardio-vacular exercises in the gym had fallen rather sharply. My GP tended to agree with my diagnosis of acute indigestion, as he would have expected that a real heart attack would have had more of an impact. But he did recommend that I did some blood tests. This I did last Friday morning, at 8.30 a.m. By midday my GP had rung me to say that one of these tests had revealed a high troponin level, indicative of heart problems. He recommended that I go to St George’s A & E to get an ECG (electro cardiogram – where they put a dozen electrodes on your skin and get traces of your pulse). This I did straight after lunch, expecting to be home for tea. But the ECG showed an abnormal trace. I was admitted to hospital, hanging around in A & E while a bed was cleared. The next step was the angiogram – but that couldn’t be run until Monday. Meanwhile I was kept under observation, with a cocktail of drugs administered by tablet and injection.

Now I am at home in rehab, recovering from the damage to my heart from the blocked artery, and the operation itself – but the prospects for a full recovery are good. But I’ll be on pills for a long time, probably for the rest of my days. At the moment there are six different sorts of pill, but it should come down to less than that after a year. My fitness regime will have to be adjusted downwards so as not to place too much strain on the heart. I am quite lucky though, first that the original attack did not do more damage, and second that the problem was picked up before the blockage to my artery caused more damage to the heart and maybe a more serious attack.

Why me? I don’t hit any of the main risk factors – except that I was not avoiding cholesterol in my diet. In fact I was a heavy cheese eater, and relished meat fat and chicken skin. That will now change. But some peple are just more at risk than others. My physical fitness may have helped reduce the effect – though a bit too well if it had meant that I had avoided having it checked out.

It is customary at this point to praise Britain’s NHS and scorn its critics. I will try and be a bit more objective, after my close observation of the service at work. But it doesn’t come out badly.

Firstly I am immensely grateful to all those many professionals that helped me through the episode. I always felt that they had my interests at heart and they did their best to help me. Nurses, doctors, technicians, pharmacists and surgeons – I can’t fault any of them. I now have very benign feelings towards St George’s hospital, which happens to be my local one – from being a rather anonymous presence beforehand.

Second I cannot fault the overall effectiveness of what the NHS acheived. From the point of that blood test a system was quickly kicked into action that was appropriate at every step, acheived the right outcome, while managing the risks properly. And at points the service was better than good. The surgery was world class; the briefing from the cardiac rehab nurse afterwards was also deeply impressive. The speed with which my blood sample was analysed and acted on was very impressive too.

Effective, yes, but how efficient? Here I was left with a few question marks. I ran into an awful lot of different professionals in my journey, having to repeat my story to up to ten different doctors. This is a warning sign from a process management standpoint – though the need for specialists, 24 hour cover and risk management does not make the matter easy. And there was an awful lot of paper records and documents. It isn’t surprising that there were communication breakdowns; I’m still waiting for my discharge papers. And the whole thing about the service going on hold for the weekend does not feel right either. At least one, and probably two nights of my four night stay were clinically unnecessary. Room for improvement, I would say – and that matters in a tax funded system where overall resources are subject to arbitrary limits.

It is clear though that I was much better off under the NHS system than I would have been under the US one, especially before Obamacre kicks in. I would not have qualified under any of the government funded schemes, and neither would I have been covered by an employer plan. I would either have to to have bought my own insurance plan, which would suddenly have become a lot more expensive. Or I would have to have winged it without insurance, which would have landed me in serious trouble.

But then very few people outside the US think that their system is in any way sensible. A universal insurance scheme, like most advanced countries run, would have caused a little more bureaucracy at the start of my hospital visit, but nothing very burdensome. And I don’t believe that health professionals would be any less caring or professional if they were not working for a state provider. Neither do I beleive that the vagaries of private sector management are any worse than the arbitrary resource management of a nationalised, tax-funded system.

But the NHS did do the job it was supposed to do. And for that I am thoroughly thankful.

I can’t over-emphasise how important the concepts in this article in last week’s Economist are:An incurable disease, and I would urge my readers to try and get to grips with it. If you want to understand how our economy is changing, and the implications for public services, the idea it describes is critical. It ranks alongside Ricardo’s law of comparative advantage (gains from trade) and Keynes’s multiplier (fiscal policy) as a counter-inituitive idea that explains so much.

What it describes is something usually referred to as “Baumol’s cost disease”, and reviews a book by the eponymous William Baumol, “The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t”. It stems from the observation that productivity grows in some parts of the economy faster than in others. The paradox is that the more productivity in a sector advances, the smaller its share in the the economy at large. Thus agriculture used to dominate the economies of the current developed world – but as agriculture became more productive, it needed less people and so shrank to a negligible propertion of GDP – while generating ever larger larger quantities of agricultural produce. The same effect is clearly visible in manufacturing industry – producing more goods than ever, but from a shrinking workforce. The more these areas advance, the bigger less productive sectors bulk in the economy as a whole. It is, misleadingly, referred to as a “disease” because these less productive sectors, within the service economy, then act as a drag on economic growth as a whole. It is not in fact a disease, but a symptom of success. The failure of economists to understand the difference between creating wealth and realising it (i.e. turning that wealth into something that actually benefits humankind) is one the biggest failures of the dismal science, and it is a shame that Mr Baumol perpetuates it in the title of his book.

The most important of these unproductive services are healthcare and education. Personal contact go the very heart of what these services are: to succeed these services must accept that people are individuals, and that a solution which works for one person may well not work for her superficially similar neighbour. But, while productivity grows only slowly, if at all, costs, i.e. rates of pay, must reflect the increased productivity of the economy as a whole. So costs advance faster than productivity. Sound familiar? But this only happens because we can afford it.

The eye-catching claim in the book is that on current treads healthcare will take up 60% of the US economy in 100 years, and 50% of the UK one. But this is all paid for by the fact that other parts of the economy have become more efficient – and in fact it only takes up such a large part of the economy because these parts of the economy have become more efficient. Actually this projection is a bit silly. I think the advance of conventionally measured productivity will slow, as technological change now affects quality rather than quantity. Also other sectors of the economy will reverse productivity as people value personal content more (think of the return to craft food production). But it is rather a good way to make the point.

Which means that the challenge with healthcare and education is not that growing costs are unaffordable, as various right-wing types claim, but something much more subtle. There are three issues in particular:

A lot of healthcare is indeed inefficient, both in the UK and the US, and political pressure must be brought ot bear to address this. But don’t expect it to halt or reverse the share of health costs in the economy in the long run. The NHS “Nicholson challenge” in the UK may therefore be a valid policy goal, but it will not solve the long-term funding needs of the health service.

The larger the share of the economy healthcare takes up, the more difficult it will be to fund it entirely from tax. In the UK this either means that a parallel private sector will flourish and undermine the NHS (as has already happened in dentistry), or that the NHS will need to be a lot less squeamish about co-payments.

There is a temptation for the owners and workers in the highly productive parts of the economy to keep the rewards to themselves, creating inequality and undermining public the public sector. And yet we still want productivity to advance so that we can all afford a higher standard of service. Higher taxes are part of the solution, but only part. Again this points to the fact that a higher proportion of healthcare (and education) services will have to be delivered and paid for privately – allowing the remainder of the public services to pay decent wage rates.